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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

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15 comments:

I don’t know that Tyler’s statement is so obvious, and I may have referred to that last week too.

Price is not the only consideration in whether a house sells. Just as an example, I’ve been to houses where the smell was so bad that you could hardly go in. Yes there would be some lower price such a house would sell at, but a better solution to giving up $30,000-$100,000 or more of money might be to get rid of the smell. Or it might be something as simple as unreasonable showing restrictions.

To address a written question about why a house is not selling with a response that the price is too high is rather irresponsible, IMHO. Reducing the price might be a very expensive solution when their might be a better solution. Maybe the owner would take that expensive solution over the other solution, but they should at least be given options. Without seeing the house it would be impossible to know the options.

This one is incredible. Apparently Bank of America is offering a new program to allow people to rent in lieu of being foreclosed. They then would have the option to buy the property back after say 3 years.

The problem I see with it is I don’t understand why it wouldn’t be illegal under our Distressed Property law! You have an owner in distress. You have a party offering to take a deed from them, allow them to stay in the property for rent, and a proposal which allows them to buy the property back later. That’s exactly what the legislature was trying to prevent scammers from doing!

I haven’t gone through the statute in detail to see if it would be prohibited, but it seems very close if not.

Glenn Kelman adds fuel to the fire of wait, and see Real Estate hype, and that’s OK?

The technology has always been there, but Glenn directs his staff to deliberately create more hysteria, and I guess that is just good business. I think it’s completely irresponsible.

People are getting jacked up on Real Estate. The economic situation is probably worse than it was in 2006, prices are comparable to 2006, and yet there is ten times more hype than there was back then. Just because we have low interest rates doesn’t mean it is anything other than long term debt.

I’m more surprised by the people who are burying cash in Real Estate. I’m sure the speculation is we will get inflation, and there will be the ability to refinance the cash out. I don’t believe that for a minute, but have heard that sales pitch.

Buyers need to calm down, rather than be jacked up. This is a buyer’s market. The buyer is doing the seller a favor by gifting them money in exchange for a problem. People should be getting some perspective here.

I looked into it a bit further banks are excluded from being distressed home purchasers under the statute:

(6) “Distressed home purchaser” means any person who acquires an interest in a distressed home under a distressed home conveyance. “Distressed home purchaser” includes a person who acts in joint venture or joint enterprise with one or more distressed home purchasers in a distressed home conveyance. A financial institution is not a distressed home purchaser.

Wait a minute — I realized — I could actually afford that because based on current interest rates it would be $2500 a month with zero down. That’s about the price of some 2 bedroom apartment rents in Seattle!!

I could (pretend to) be the wealthiest guy in Kent East Hill (and I’m surely not, at least compared to the drug dealers).

BUT — I keep thinking — why would I pay half a mil for this — when the 14 acre home in Woodenville sold for the same price!!

No one here is shocked and disgusted that banks can enter into a financial transaction with an owner that if anyone else did there would be all sorts of safeguards to protect the owner?

Joe Investor needs to do all sorts of inquiry into a seller’s financial situation if they want to do a sale/leaseback. But National Bank doesn’t have to do that at all. And of course, National Bank might save itself $20,000+ and 9 months+ of no payments, but hey, we don’t need any safeguards for them!

The Distressed Property law was a drafting disaster since it was enacted, and new ways it’s bad are only being discovered now.

No one here is shocked and disgusted that an attempt is being made to help homeowners in distress work through their issues, letting them stay and pay rent, and giving them 3 years to work out a way to continue to own their home if they so choose.

It’s a good thing, Kary, in the eyes of most people who believe more and better choices is always best. For someone who is going to rent somewhere else, letting them stay in their own home without moving is likely perceived as a good thing.

No reason to be “shocked and disgusted” about a family being able to stay in their home.

RE:Kary L. Krismer @ 2 – I got one far better then that with B of A. Our Lenders have advised us they now saw 3 short sale credits to seller for ****25,000***to short sale their home. Get this …The homes are only 150k!!

Amazing..I was impressed short sale sellers were getting 3k, then 15k, and now 25k!! Simply amazing but how joyous to these short salers to ASSIST their banks in dumping their house…25k!!!

Soon EVERYONE will be wanting this BIG PAYDAY to unload their chain around their necks.

Also Kary, BAC, WFC, and Chase have been letting defaulting homeowners to rent back their homes under these programs for over a year now..They just have many different names and standards… Hardly news at all.

If Joe Blow comes upon a homeowner in distress, and offers them a sale/leaseback, they have to do all sorts of investigation into the finances of the seller, including determine that the owner is going to be able to make the option payment at the end of the term. The owner also has a five day right to cancel the contract.

The bank, in contrast, doesn’t have to do any of that. So they can enter into a contract with the homeowner who might not be able to make the rental payments, and then be evicted in short order, as opposed to being allowed to stay rent free in a house for a 9+ month period of foreclosure.

I don’t see any reason to exclude banks from being subject to the same rules as Joe Blow, especially where the legislature has extended the time it takes to foreclose. That just gives the bank more incentive to cut a deal with the owner which is bad for the owner.

I believe you missed Kary’s true point. Your comment implies that Kary thinks its a bad thing that the banks can do some form of acquisition and lease back for owners in foreclosure. I don’t think Kary’s saying that at all. I believe Kary’s point is kind of a corollary to an old legal saying that “hard cases make bad law.” The saying is about court cases that involve a party the court believes is unfairly treated and wants to protect although the law as written might not cover the facts of their case. To protect the party, the court formulates an overly broad interpretation of the law that sets a bad precedent when trying to interpret the law in the future. IMO, Kary is saying that protecting potential victims from predatory foreclosure rescue scams is a “hard case” and to prevent that potential harm the legislature enacted a vague and potentially overly broad “bad law.”

I don’t know if I’d consider the Distressed Properties law to be a “bad law” because I’ve never analysed the act, partly cause I considered that area a mess that I’d rather just avoid.

Also Kary, BAC, WFC, and Chase have been letting defaulting homeowners to rent back their homes under these programs for over a year now..They just have many different names and standards… Hardly news at all.

I’ve heard about the rental programs. Sale/leasebacks with options to purchase are different. They give the homeowner (false) hope that they can retain ownership of their home, and make them more susceptible to being taken.

BTW, I don’t have a problem at all with the bank paying money to get them to leave. That’s an entirely different matter because that’s giving up the right to stay rent free for clearly valuable consideration. How much is just a matter of what the program is, and presumably some negotiation.

If a distressed homeowner is likely to be taken advantage of, and need protection in entering into a sale/leaseback with option to purchase, why would that be any different just because the entity making them an offer is a bank that has a vested interest in getting control of the house?

Remember this was 2008 legislation. It was put into place before the start of “too big to fail”, bailouts and robosigners.

And comparing robosigners, compare the potential harm. If a robosigner doesn’t do their due diligence and starts a foreclosure where the homeowner isn’t delinquent, there are remedies built into the law where the homeowner can act to stop the foreclosure. Typically that might not even necessarily require hiring an attorney to fix the situation. In this situation, however, the homeowner can enter into a contract which could effectively accomplish the same thing as an improper foreclosure (removal of them from their home) in much a shorter time frame, with no recourse whatsoever. Which is worse?

Part of the confusion is probably my fault in that my first post used the term “prohibited” rather than “regulated.”

Tytler is right. If the market will only bear $250K for the house, then it’s a $250K house. The truth is, supply is in the toilet, and anything in good shape and priced well flies off the market in matter of days.

Note to homeowner:

Your parents lied to you. Santa Clause is not coming down your chimney bearing gifts just because you allowed yourself to become brainwashed and obedient! So take the junk vehicles out of your yard and lower the price by $250K. Then devote the rest of your life to learning how to make good choices.